A:

You don't get a direct say in a company's day-to-day operations, but, depending on whether you own voting or non-voting stock, you may have a hand in shaping its board of directors and deciding on special issues.

Voting Stock – If the stock you own is a voting stock and you're a shareholder on record when a decision must be made through a vote, you have a right to vote on the issue. The right to vote for a member on the board of directors or on a specific business decision is similar to the right to vote for a U.S. senator or on a political issue in a plebiscite: you don't have to vote if you don't want to, and you don't really get a direct say in daily government operations (although you do vote on the people that do). The one main difference between voting as a citizen and voting as a shareholder is that if, as a shareholder, you choose not to submit your vote, there is the possibility that a default choice will be made regardless of your true desires. Be sure carefully to read the fine print on the proxy form sent to you.

Non-Voting Stock – A non-voting stock doesn't allow you to participate in votes affecting shareholders and the company. These types of shares are created so that investors who forfeit the right to have a say in the direction of the company are able to participate in the company's profitability and success.

Not all companies offer these two different types of stock, and not all types of voting stock have the same voting rights. If you are interested in playing a part (albeit a very small one) in the decision making processes of a company, make sure you buy the right type of stock.

Warren Buffett's Berkshire Hathaway presents a real life example of a voting vs. non-voting share situation. The company has two classes of stock, Class A (denoted by the ticker symbol: BRK.A) and Class B (denoted by the ticker symbol: BRK.B). A Class B stock trades at 1/30th the price of a Class A stock; however, it only carries 1/200th of the voting rights.

If you would like to learn more about stocks and the stock market, check out this Stock Basics Tutorial. For more on the issue of shareholder rights, check out this Knowing Your Rights As A Shareholder and What is the investor rights movement?

RELATED FAQS
  1. What can shareholders vote on?

    Understand the usual voting rights of common stock shareholders, along with the importance of shareholders exercising their ... Read Answer >>
  2. What is the difference between Class A shares and other common shares of company's ...

    Discover how a company can break down its common stock into multiple classes and how these classes differ from one another ... Read Answer >>
  3. Why would a company have multiple share classes, and what are super voting shares?

    Firstly, do not confuse different classes of common stock with preferred stock. Preferred shares are an entirely different ... Read Answer >>
  4. Do convertible bonds have voting rights?

    Convertible bonds usually have no voting rights until they are converted. Even after conversion, they may not be granted ... Read Answer >>
  5. What happens to the voting rights on shares when the shares are used in a short sale ...

    The registered owner of the security, known as the holder of record, is the investor who retains voting rights. This means ... Read Answer >>
  6. What rights do all common shareholders have?

    Learn what rights all common shareholders have, and understand the remedies that can be taken if those rights are violated ... Read Answer >>
Related Articles
  1. Investing Basics

    Shareholders: Vote Your Proxy and Be Heard

    Voting shares, in person or via proxy ballot, is a right every shareholder should exercise. Here's why.
  2. Professionals

    Common Stock Benefits

    NASAA Series 65: Section 9 Common Stock Benefits. In this section voting rights and types of voting systems.
  3. Mutual Funds & ETFs

    Proxy Voting Gives Fund Shareholders A Say

    You have the right to take part in important company decisions - even if you cannot attend the meetings.
  4. Investing Basics

    What Is Tenure Voting?

    This stockholder voting structure, one of three types, has advantages and disadvantages. Here’s a look at the pros and cons of all three.
  5. Professionals

    Voting

    As a common stockholder, you have the right to vote on the major issues facing the corporation. You are a part owner of the company and, as a result, you have a right to say how the company is ...
  6. Professionals

    Corporate Securities: Common Stock

    FINRA Series 6 Exam Study Guide - Corporate Securities: Common Stock. Summary of the rights and privileges enjoyed by the common stockholder such as stock certificate, limited liability, dividends, ...
  7. Mutual Funds & ETFs

    What Does Your Mutual Fund Say About You?

    How your fund votes on proxy issues will reveal whether it's acting in your best interest and according to your beliefs.
  8. Entrepreneurship

    Keeping Control of Your Business After the IPO

    Taking a company public doesn't mean founders must completely give up calling the shots. Before the IPO, consider these tactics to keep control after it.
  9. Investing Basics

    Stocks Basics: Different Types Of Stocks

    There are two main types of stocks: common stock and preferred stock. Common Stock Common stock is, well, common. When people talk about stocks they are usually referring to this type. In fact, ...
  10. Fundamental Analysis

    Ethical Investing: Investor Activism and Shareholder Advocacy

    By Amy Fontinelle For some people, buying stocks in companies, whose actions they support, isn't enough. Activist investors seek to directly change the practices of targeted companies. As Amy ...
RELATED TERMS
  1. Statutory Voting

    A corporate voting procedure in which each shareholder is entitled ...
  2. Voting Right

    The right of a stockholder to vote on matters of corporate policy ...
  3. Cumulative Voting

    The procedure of voting for a company's directors; each shareholder ...
  4. Voting Shares

    Shares that give the stockholder the right to vote on matters ...
  5. Class A Shares

    A classification of common stock that may be accompanied by more ...
  6. Class B Shares

    A classification of common stock that may be accompanied by more ...

You May Also Like

Hot Definitions
  1. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
  2. Keynesian Economics

    An economic theory of total spending in the economy and its effects on output and inflation. Keynesian economics was developed ...
  3. Society for Worldwide Interbank Financial Telecommunications ...

    A member-owned cooperative that provides safe and secure financial transactions for its members. Established in 1973, the ...
  4. Generally Accepted Accounting Principles - GAAP

    The common set of accounting principles, standards and procedures that companies use to compile their financial statements. ...
  5. DuPont Analysis

    A method of performance measurement that was started by the DuPont Corporation in the 1920s. With this method, assets are ...
  6. Call Option

    An agreement that gives an investor the right (but not the obligation) to buy a stock, bond, commodity, or other instrument ...
Trading Center